MTN’s MoMo PSB Reshapes Strategy as Active Wallet Users Drop by 46%

MoMo PSB, the fintech arm of MTN Nigeria, has recorded a 46% decline in active wallet users, dropping from 5.3 million in 2023 to 2.8 million in 2024. The company also saw a significant drop in its agent and merchant networks, with merchants declining by 76.8% and agents by 79.2%. Despite these setbacks, transaction volumes increased by 4.3%, signalling a shift in strategy. MTN Nigeria CEO Karl Toriola insists the decline is part of a broader strategic shift to improve service penetration, enhance monetisation, and optimise customer acquisition costs.

The Challenges of Scaling PSBs in Nigeria

MoMo PSB was launched in 2022 alongside other Payment Service Banks (PSBs) to expand financial inclusion in Nigeria’s unbanked and underserved areas. Licensed by the Central Bank of Nigeria (CBN), PSBs were positioned as alternatives to traditional banks, offering essential banking services such as deposits, transfers, and bill payments. However, regulatory limitations prevent them from providing loans, forex services, or making investments beyond government-approved securities, constraining their revenue potential.

Despite their promise, PSBs have struggled to match the traction of fintech giants like Opay, Moniepoint, and PalmPay. These platforms have aggressively onboarded millions of users, leveraging digital banking innovations and agent networks. Unlike fintech firms that can scale rapidly with flexible financial services, PSBs operate within a restricted model that primarily relies on deposits and transaction fees.

A key factor in Nigeria’s mobile money adoption is agent banking, as many rural users lack smartphones or reliable internet access. MoMo PSB initially saw success by expanding its agent network from 103,000 in December 2022 to 327,000 by the end of 2023. However, the company has since undergone a strategic pivot, moving away from heavy reliance on agents, leading to a significant drop in agent and merchant numbers—now at 68,016 agents (down 79.2%) and 75,168 merchants (down 76.8%).

A Shift Toward Digital Banking

MTN Nigeria has invested heavily in MoMo PSB, injecting ₦16.4 billion at launch and an additional ₦9.4 billion in 2024 to acquire the remaining 7.17% stake from Acxani Capital, making MoMo PSB a fully owned subsidiary. Initially, this investment fuelled rapid expansion, with active wallets growing from 2 million in December 2022 to 5.3 million by the end of 2023. However, by 2024, the active wallet count had plummeted to 2.8 million, while cash deposits from users halved from ₦7.6 billion to ₦3.8 billion.

According to fintech industry experts, MoMo PSB’s shift away from agent banking signals a broader trend among PSBs. “Many payment service banks are now focusing on urban areas and competing for existing bank customers rather than expanding to the rural communities they were originally designed to serve.”. “This is because the cost of onboarding and servicing the unbanked is significantly higher than anticipated.”

Additionally, some analysts speculate that MoMo PSB’s strategy overhaul could be linked to past fraud incidents. In May 2022, the company suffered a major security breach, losing approximately ₦22.3 billion ($53 million). This event may have triggered tighter risk controls and a fundamental shift in customer acquisition strategies.

Future Strategy: Expanding Beyond Mobile Money

Despite the drop in wallet users, MoMo PSB reported a 4.3% increase in transaction volume in 2024. Toriola argues that the company is now optimising for a higher-quality wallet base rather than simply expanding numbers. To further diversify its revenue streams, MoMo PSB has applied for additional regulatory licenses, including Payment Service Solutions Provider (PSSP) and Payment Terminal Service Provider (PTSP) approvals. These would enable the company to offer payment gateway services, merchant aggregation, and point-of-sale (PoS) terminal management—areas that could help reduce reliance on agent networks and cater more effectively to SMEs and individual customers.

Looking ahead, MoMo PSB aims to strengthen user engagement and retention to reverse the decline in wallet activity before the end of 2024. With increasing competition from fintech disruptors, its success will depend on whether it can pivot effectively from agent-led banking to a scalable digital-first approach while maintaining regulatory compliance and consumer trust.